UK housing wealth tops £7 trillion mark for first time ever

19 January 2018

The total value of the UK’s housing stock has passed the £7 trillion mark for the first time ever and now stands at £7.14 trillion, having risen 34 per cent in the past ten years, according to new analysis published by international real estate adviser, Savills. 

“This represents a phenomenal £1.82 trillion gain over the decade, even accounting for sharp house price falls in the post credit crunch years,” says Lawrence Bowles, a research analyst at Savills. “Our analysis reconfirms housing’s position as the UK’s largest store of private wealth, its value equivalent to almost ten times the UK Government’s total income in 2017.”

  • Housing in the UK is now worth £7.14 trillion, 34% or £1,822 trillion more than 10 years ago
  • 81% of the 10 year gains come from house price growth, 19% (£346bn) from housebuilding
  • London and the South of England account for 87% of total housing value gains since 2007
  • London alone has less than 1 in 8 homes and a quarter of the total value (vs 19% in 2007)
  • Total housing value rose 4.8% (£329 billion) last year, with Edinburgh, Birmingham and Barnet seeing the biggest gains as the geographical distribution of house price growth shifts
  • Private landlords and owners without a mortgage have been the big winners: accounting for 95% of the total growth in private housing wealth since 2007
  • Privately owned housing is less leveraged than at any point in the past ten years.  Equity now totals £5.3 trillion, 81% of all private UK housing value

The regional split - gains unevenly distributed

Value gains have been heavily concentrated in the UK capital and associated markets over the past decade.  London alone accounts for 42 per cent of the total value uplift since 2007.  Combined with the wider South of England, that total rises to a massive 87 per cent of all gains.

This growth has compounded the uneven distribution of housing wealth across the UK.  London accounts for a quarter of total housing value (£1,785 billion) but just 12 per cent of all homes (3.54 million).  Its housing stock is now worth five times as much as all the homes in Birmingham, Edinburgh, Glasgow, Bristol, Manchester, Cardiff, Oxford, Cambridge and Belfast combined.

London and the South together account for just 44 per cent of all homes, but almost two-thirds (64%) of the UK’s total housing value.  By contrast, the Midlands, North, Wales, Scotland and Northern Ireland together have 65 per cent of all housing stock, but just 45 per cent of value.

Homes in Westminster and Kensington & Chelsea are now worth a total of £236bn. That’s more than the value of all homes in Wales combined (£216bn). Housing in the London Borough of Hammersmith & Fulham was worth £58bn, more than the county of Somerset (£57bn).

Changing patterns of growth – London no longer tops the league table

The pattern of growth shifted dramatically. “We saw London’s share of the UK’s housing value drop last year for the first time since 2005,” says Bowles. “Affordability pressures are now limiting price growth in the capital and associated markets across the South East and East of England, which slowed dramatically see table here .

“But while stretched affordability is constraining house price growth in the UK’s high value housing markets, the Midlands, North and Scotland have all grown faster this year than previously."

Source: Savills Research

This is a trend that is expected to continue, with Savills forecasting growth of just 7.1 per cent in London and 11.5 per cent in the South East over the next five years, compared to 18.1 per cent in the North West, for example, and 14.2 per cent across the UK as a whole.

The districts with the fastest growth in housing value in 2017 were Edinburgh, Birmingham, and Barnet. This marks a step away from the longer term trend, with Inner London dominating the fastest growing districts over the last ten years see table here .

Source: Savills Research

The big winners (private housing sector) - 95% of 10 year equity gains go to private landlords & owner occupiers with no mortgage

In 2007, total housing equity stood at £3.8 trillion, with debt of £1.2 trillion.  Equity has risen to £5.3 trillion, with debt standing at around £1.4 trillion.  As a result, private housing is less leveraged than at any point in the past ten years, with equity accounting for 81 per cent of total value. 

But housing wealth is increasingly concentrated in fewer, older hands – notably owner occupiers who own their homes outright and private sector landlords.  Together they have seen their housing equity grow by £1.4 trillion over the past ten years.

Owner occupiers without a mortgage now hold £2.5 trillion in housing wealth, equivalent to 38 per cent of the total value of all privately owned homes.  Private landlord equity has increased to £1.3 trillion, up from £0.6 trillion ten years ago, and a £89bn gain year on year, a result of value growth and a larger pool of properties.

By contrast, the housing wealth and debt owned by mortgaged owners occupiers remains as it the same as it was ten years ago, but concentrated in fewer hands.  While the average value of a mortgaged home has gone up over the period, the number of homes with a mortgage has fallen by 17 per cent, a combination of some mortgagees paying off their loans and a reduction in numbers able to access borrowing see table here.

Source: Savills Research (PRS = private rented sector)

 
 

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